How Parcel Collect Can Turn Royal Mail Into A Returns Leader

Launched in October 2020, Parcel Collect is Royal Mail’s home collection service. It’s designed to process both prepaid packages and returns for select retailers, allowing consumers to send packages without leaving their home.

But the true power of Parcel Collect isn’t what it offers today, but the potential power it can bring.

Like other national postal providers, Royal Mail is obligated to provide delivery to every address in the UK as part of their Universal Service Obligation (USO).

Parcel Collect is how Royal Mail is turning its USO into opportunity. They already have the infrastructure and routes in place to visit every address in the UK each week. If they collected parcels at the same time as delivering, they can cut costs and provide an attractive offer to every consumer in the UK.

Globally, the same service could be replicated by other mail carriers who also share a legal obligation to serve every doorstep in their country. It’s a great opportunity for postal carriers to differentiate themselves within the market and offer something that other carriers cannot facilitate.

Nobody else in the UK delivers mail, so it’s essentially impossible for Royal Mail’s competitors in the ecommerce delivery and returns space to offer the same service without a significant uptick in cost. That’s not sustainable for carriers, who see a higher profit margin by getting their consumers to consolidate returns into drop-off locations.

Parcel Collect is also a sustainable option as Royal Mail can provide this service without putting more vans on the road or increasing journeys. Posties are already doing these rounds, they’re just picking up parcels at the same time, as their recent advertising highlights.

Paired with Royal Mail’s new environmental plan to achieve its Net Zero target 10 years earlier, this offering will play a key role in their sustainability focus.

We tried Parcel Collect in its early stages last year, where we believed that it had the building blocks of a successful and profitable home pick-up network. But there are two pivotal problems that Royal Mail, and other posts looking to offer similar services, will have to conquer to see that success.

A home pickup promises convenience, but the first challenge for Parcel Collect is about making sure that it really feels convenient for shoppers.

Clear communication is a cornerstone of the customer experience of delivery, and the same is true of returns, especially when there’s the same element of waiting for the postal worker to arrive. In comparison to drop-off locations which consumers can use whenever they like, Parcel Collect means they must wait at home – which is great, if they know when their parcel will be collected. Without clear comms, the customer experience becomes more about waiting for the doorbell than the easy and convenient handover.

Parcel Collect does work with pre-paid returns labels from retailers, but with only 18% of retailers utilising these labels (Doddle 2022), the service also offers print-at-home labels, or customers can order a label which the postie will bring to the doorstep at the point of collection.

Of these journeys, none are hugely customer friendly. Having the label in the box is all well and good, but doesn’t give the retailer any insight into the return, requires the customer to fill out a form (which results in unreliable data) and for that data to be manually input into a system when the return is processed (which results in slower processing and flawed data.) Booking the label in advance is tedious for the customer and requires them to visit Royal Mail on their own initiative to fill out forms online, whether they then print the label at home or ask the postie to bring it.

We predict that the next logical step for Royal Mail is to give postal workers small, portable printers and QR readers in order to provide a better paperless return option for shoppers and improved customer experience. Shoppers booking a return can do so from the retailer site, pop their order number into a portal, select their return reason, select home collection, and generate a QR code to be sent to their email.

As they reach the doorstep of a Parcel Collect customer, a postal worker can use that QR code to scan the item as handed over and generate a returns label right there on the doorstep. That scan can also trigger customer communications to confirm the handover, and give the retailer advance notice of the return, as well as the reason for the return.

For a consumer, this means less time and hassle ordering and printing labels and fewer forms to fill.

For Royal Mail, this saves time having to preprint labels before a round, and potentially offers the ability to accommodate for returns booked after a worker has started their route, on the fly.

The second key challenge for Parcel Collect is the role it can play to help small businesses selling online to deal with their returns issue.

A recent Doddle study revealed that 57% of retailers said returns were a significant problem for their business. In the UK, British retailers are losing around £7 billion a year from consumers ‘bracketing’ their orders, which is the process of ordering multiple sizes with the intention of sending most back.

Currently, 1 in 4 retailers are charging customers for returns to recover costs.

Most SMBs don’t have the resources to build integrated solutions themselves. They need a solution that’s easy for them to set up, through which they can offer convenient returns options to their customer and enforce their own returns rules. That means allowing them to set the length of their returns policy and checking against the order date, and potentially preventing certain items from being returned, particularly if they are outside of guarantee or cannot be resold, such as swimwear or sales items.

This will save smaller merchants from dealing with out-of-policy returns, which in turn avoids waste and improves profits. What’s more, by using a fully integrated solution retailers won’t have to rely on supplying labels inside packages, reducing waste and cost of printing – and they’ll have access to information about incoming returns before they turn up at their doorstep, which means they can plan in advance for processing.

Royal Mail already provides excellent returns services for SMBs. By combining a fully integrated returns portal with a paperless doorstep collection, they will be able to offer merchants of all sizes the quality of returns experience that currently only the biggest online merchants can provide.

Looking to reduce costs on your returns strategy? Talk to our team today.